Productivity Up Sharply in First Quarter

The productivity of American workers rebounded at a rapid clip at the start of this year and wages posted a solid gain as well, the government reported Thursday.

The Labor Department said that productivity, the key factor in rising living standards, rose at an annual rate of 3.7 percent in the January-March quarter, better than the 3.2 percent increase initially estimated a month ago. Salaries and benefits per unit of output rose by 1.6 percent after having fallen by 0.6 percent in the fourth quarter.

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In other economic news, the number of newly laid off workers filing claims for unemployment benefits unexpectedly increased to 336,000 last week, a gain of 7,000 from the previous week. Analysts had been expecting jobless claims would decline following recent increases that had been caused by temporary government shutdowns in Puerto Rico.

The increase in weekly claims pushed the four-week moving average for claims up to 333,500 from 330,750 the previous week. That was the highest level for the four-week average since last October.

Even with this slight rise, the expectation is that Friday's unemployment report will show a healthy labor market with the number of jobs created rebounding to around 170,000, up from a disappointing 138,000 job gain in April. The unemployment rate is expected to hold steady at 4.7 percent.

The increase in productivity represented a big rebound after productivity had fallen at an annual rate of 0.3 percent in the fourth quarter. It was the best quarterly showing since a 4.2 percent productivity increase in the third quarter of 2005.

The first quarter figure had originally been reported as a smaller 3.2 percent rise, but it was revised following the government's revision of overall economic activity, as measured by the gross domestic product, to a sizzling 5.3 percent rate for the first quarter, up from an initial estimate of 4.8 percent.

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